Kotak Mahindra's disappointing 3Q performance - Views on News from Equitymaster

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Kotak Mahindra's disappointing 3Q performance

Jan 16, 2001

Kotak Mahindra Finance has reported a marginal growth in net profits for the quarter ended December 2000.

(Rs m) 3QFY00 3QFY01 Change
Sales 494 436 -11.7%
Other Income 107 121 12.9%
Interest Expenditure 217 180 -17.1%
Operating Profit (EBDIT) 277 256 -7.6%
Operating Profit Margin (%) 56.1% 58.8%
Other Expenses 76 115 51.0%
Depreciation 119 101 -15.2%
Profit before Tax 189 162 -14.7%
Other Adjustments 31 3 -91.5%
Tax 55 55 0.0%
Profit after Tax/(Loss) 103 104 0.6%
Net profit margin (%) 20.9% 23.9%
No. of Shares (eoy) (m) 36.7 45.9
Diluted Earnings per share* 9.0 9.1
P/E (at current price) 10 9

The company has announced a merger with Pannier Trading Company Pvt. Ltd. at a swap ratio of 25:1. Pannier holds 75% of the equity shares of Kotak Securities. Consequently, KS will become a 75% subsidiary of Kotak Mahindra (KMFL). The board has also proposed to acquire the foreign exchange broking business of Uday Kotak who holds 54% stake in KMFL.

KMFL is planning to enter a banking venture and has already received licence for life insurance business. Thus all business interest on Mr. Uday Kotak (Vice Chairman) in the financial service business after the proposed merger will be only through KMFL.

At the current market price of Rs 86, KMFL is trading at a P/E of 9 times its 3QFY01 annualised earnings.

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